Note -1 : Material Accounting Policies Information
A. CORPORATE INFORMATION
Salasar Techno Engineering Limited (the 'Company') is a public limited company domiciled in India. Its shares are listed on
two stock exchanges in India viz, the Bombay Stock Exchange ('BSE') and the National Stock Exchange ('NSE'). The Company
has three manufacturing facilities one at Jindal Nagar, Hapur (UP) and two at Khera Dehat, Hapur (UP).
The Company is engaged in the business of manufacturing and sale of Galvanized Steel Structure including Telecom Towers,
Transmission Line Towers and Solar Panels.
The Company is also engaged in execution of Engineering, Procurement and Construction projects (EPC) for survey, supply
of materials, design, erection, testing & commissioning on a turnkey basis.
B. SUMMARY OF BASIS OF COMPLIANCE, BASIS OF PREPARATION AND PRESENTATION, CRITICAL ACCOUNTING
ESTIMATES, ASSUMPTIONS AND JUDGMENTS AND MATERIAL ACCOUNTING POLICIES
(i) Basis of compliance
The financial statements comply in all material aspects with Indian Accounting Standards ('Ind AS') notified under Section
133 of the Companies Act, 2013 ('the 2013 Act') read with Rule 3 of the Companies (Indian Accounting Standards) Rules,
2015 and other relevant provisions of the Act.
(ii) Basis of Preparation of Financial Statement
The financial statements have been prepared under the historical cost convention using the accrual method of
accounting basis, except for certain financial instruments that are measured at fair values at the end of each reporting
period as explained in the material accounting polices below.
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and
other criteria set out in the Schedule III to the 2013 Act.
(iii) Critical accounting estimates, assumptions and judgements
The preparation of the financial statements requires management to make estimates, assumptions and judgments that
affect the reported balances of assets and liabilities and disclosures as at the date of the financial statements and the
reported amounts of income and expense for the periods presented.
The estimates and associated assumptions are based on historical experience and other factors that are considered to
be relevant. Actual results may differ from these estimates considering different assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting
estimates are recognised in the period in which the estimates are revised and future periods are affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of
assets and liabilities within the next financial year are discussed below :
(i) Useful life of Property, Plant and Equipment
The cost of property, plant and equipment is depreciated over the useful life, which is based on expected usage of
the assets, expected physical wear and tear, the repair and maintenance program and technological obsolescence
arising from changes and residual value
(ii) Income taxes
Management judgment is required for the calculation of provision for income taxes and deferred tax assets and
liabilities. The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors
used in estimates may differ from actual outcome which could lead to significant adjustments to the amounts
reported in the standalone financial statements.
(iii) Contingencies
Management judgement is required for estimating the possible outflow of resources, if any, in respect of
contingencies/claim/ litigations against the Company as it is not possible to predict the outcome of pending matters
with accuracy.
(iv) Allowance for uncollectable accounts receivable and advances
Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances
for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them
not to be collectible. Impairment is made on the expected credit losses, which are the present value of the cash
shortfall over the expected life of the financial assets.
(iv) Use of estimates
The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities as at the date of the Financial Statements and the reported amount of revenues and
expenses during the reporting period/year.
The difference between the actual results and estimates are recognised in the year in which the results are known/
materialise.
All Assets and liabilities have been classified as current or non-current as per the Company's normal operating
cycle and other criteria set out in the schedule III to the Companies Act, 2013. Based on the nature of products and
the time between the acquisition of assets for processing and their realisation in cash and cash equivalent, the
Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of
assets and liabilities
(v) Fair Value Measurement
Fair value is the price that would be received to sell an asset or settle a liability in an ordinary transaction between
market participants at the measurement date. The fair value of an asset or a liability is measured using the assumption
that market participants would use when pricing an asset or liability acting in their best economic interest. The
Company used valuation techniques, which were appropriate in circumstances and for which sufficient data were
available considering the expected loss/ profit in case of financial assets or liabilities.
(vi) Property, Plant & Equipment
On transition to IND AS, the Company has adopted optional exception under IND AS 101 to measure Property, Plant
and Equipment at fair value. Consequently the fair value has been assumed to be deemed cost of Property, Plant and
Equipment on the date of transition. Subsequently, Property, Plant and Equipment, other than land, are carried at
cost less accumulated depreciation and accumulated impairment losses, if any.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation on PPE is calculated using the straight-line method to allocate their cost, net of their residual values,
over their estimated useful lives. However, vehicles, being part of PPE are depreciated on a straight-line method
over the shorter of their respective useful lives as prescribed in Schedule -II to the Companies Act, 2013 . Freehold
land is not depreciated.
Schedule II to the Companies Act 2013 ('Schedule') prescribes the useful lives for various class of assets. For certain
class of assets, based on technical evaluation and assessment, Management believes that, the useful lives adopted
by it reflects the periods over which these assets are expected to be used. Accordingly for those assets, the useful
lives estimated by the management are different from those prescribed in the Schedule. Management's estimates
of the useful lives for various class of fixed assets are as given below:
Useful lives and residual values of assets are reviewed at the end of each reporting period.
Losses arising from the retirement of, and gains or losses arising from disposal of PPE are recognised in the
Statement of Profit and Loss.
Leasehold land is amortised on a straight line basis over the period of lease.
Capital work-in-progress includes cost of property, plant and equipment under installation / under development
as at the balance sheet date.
Intangible Asset under development includes cost of development of new intangible assets to complete the
assets as at the balance sheet date.
Capital Expenditure on tangible assets for research and development is classified under property, plant and
equipment and is depreciated on the same basis as other property, plant and equipment.
(vii) Intangible Assets
Intangible assets that are acquired by the Company, which have finite useful lives, are measured at cost less
accumulated amortization and accumulated impairment losses (if any). Costs include expenditure that is directly
attributable to the acquisition of the intangible assets.
An Intangible Asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset are recognised in the Statement of Profit and Loss
when the asset is derecognised.
Subsequent Expenditure:
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, are recognized in profit or loss as incurred.
Amortization of intangible assets with finite useful lives:
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible
assets from the date that they are available for use.
Computer Softwares are amortised on straight line basis over the estimated useful lives of 6 years.
(viii) Impairment of Non Financial Assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested
annually for impairment and additionally whenever there is a triggering event for impairment. Assets that
are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount of cash generating units exceeds its recoverable amount.
(ix) Inventories
(1) Inventories are valued at the lower of cost or net realisable value.
Costs incurred in bringing each product to its present location and condition is accounted for as follows:
• Raw materials: are valued at cost on FIFO basis or net realisable value, whichever is lower.
• Finished goods and work in progress and stores, spare parts and packing materials: are valued at cost or
net realisable value, whichever is lower. In the case of finished goods and work in process cost comprises
of material, direct labour and applicable overhead expenses.
• Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. These are valued at cost or net realisable value, whichever is lower.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
(2) Cost of Inventory of services being provided by the company
The company measures its inventory of services at the costs of their production. These costs consist
primarily of the labour and other costs of personnel directly engaged in providing the service, including
supervisory personnel, and attributable overheads. Labour and other costs relating to sales and general
administrative personnel are not included but are recognized as expenses in the period in which they are
incurred. The cost of inventories of a service does not include profit margins or non-attributable overheads
that are often factored into prices charged by service providers.
(3) Rejection and scrap
Rejection and scrap are valued at net realisable value. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the estimated costs necessary
to make the sale.
(x) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial Assets
(a) Initial recognition and measurement:
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at
fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial
asset.
(b) Subsequent measurement
For purposes of subsequent measurement financial assets are classified in two broad categories:
• Financial assets at fair value
• Financial assets at amortised cost
(c) Classification:
The Company classifies financial assets as subsequently measured at amortised cost, fair value through
other comprehensive income or fair value through profit or loss on the basis of its business model for
managing the financial assets and the contractual cash flows characteristics of the financial asset.
(d) Financial assets measured at amortised cost:
Financial assets are measured at amortised cost when asset is held within a business model, whose
objective is to hold assets for collecting contractual cash flows and contractual terms of the asset give rise
on specified dates to cash flows that are solely for payments of principal and interest. Such financial assets
are subsequently measured at amortised cost using the effective interest rate (EIR) method. The losses
arising from impairment are recognised in the Statement of profit and loss. This category generally applies
to trade and other receivables.
(e) Financial assets measured at fair value through other comprehensive income (FVTOCI):
Financial assets under this category are measured initially as well as at each reporting date at fair value. Fair
value movements are recognized in the other comprehensive income.
(f) Financial assets measured at fair value through profit or loss (FVTPL):
Financial assets under this category are measured initially as well as at each reporting date at fair value with
all changes recognised in profit or loss.
(g) Investment in Equity Instruments:
Equity instruments which are held for trading are classified as at FVTPL. All other equity instruments are
classified as FVTOCI. Fair value changes on the instrument, excluding dividends, are recognized in the other
comprehensive income. There is no recycling of the amounts from other comprehensive income to profit or
loss.
(h) Derecognition of Financial assets:
A financial asset is primarily derecognised when the rights to receive cash flows from the asset have expired
or the Company has transferred its rights to receive cash flows from the asset, if an entity transfers a financial
asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial
asset for a fee, it shall recognise either a servicing asset or a servicing liability for that servicing contract. If
the fee to be received is not expected to compensate the entity adequately for performing the servicing, a
servicing liability for the servicing obligation shall be recognised at its fair value. If the fee to be received is
expected to be more than adequate compensation for the servicing, a servicing asset shall be recognised for
the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger
financial asset.
(i) Impairment of Financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the financial assets that are debt instruments and trade receivables. For
recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition.
Financial Liabilities
(a) Initial recognition and measurement:
All financial liabilities are recognised initially at fair value and, in the case of loans, borrowings and payables,
net of directly attributable transaction costs. Financial liabilities include trade and other payables, loans and
borrowings including bank overdrafts.
(b) Classification & Subsequent measurement:
If a financial instrument that was previously recognised as a financial asset is measured at fair value through
profit or loss and its fair value decreases below zero, it is a financial liability measured in accordance with IND
AS. Financial liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing
in the near term.
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial
liabilities at fair value through profit or loss.
(c) Loans and Borrowings:
Interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective
Interest Rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised as well as through EIR amortisation process. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the statement of profit and loss. After initial recognition Gain
and Liabilities held for Trading are recognised in statement of profit and Loss Account.
(d) Derecognition of Financial Liabilities:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(e) Financial guarantee contract:
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance
with the terms of a debt instrument.
Financial Guarantee contracts issued by a company are initially measured at their fair values and, if not
designated as FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109'
Financial Instruments'; and
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in
accordance with the principles of Ind AS ' Revenue'
Offsetting financial instruments:
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis to
realise the asset and settle the liability simultaneously.
Subsequent recoveries of amounts previously written off are credited to Other Income.
(xi) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash on hand and at bank, deposits held at call with
banks, other short-term highly liquid investments with original maturities of three months or less that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value and are held for
the purpose of meeting short-term cash commitments.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the
Company's cash management.
(xii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit for the year is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments
and item of income or expenses associated with investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated. The Company considers all highly liquid
investments that are readily convertible to known amounts of cash to be cash equivalents.
(xiii) Borrowing Costs
Borrowing costs directly attributable to the acquisition, production or construction of qualifying assets
is capitalized as part of the cost of such qualifying assets till the date of being ready for intended use. Other
borrowing cost is recognized as expenditure in the period in which they are accrued.
(xiv) Investments
Investments that are readily realisable and are intended to be held for not more than one year from the Reporting
Date, are classified as Current Investments. All other investments are classified as Non Current Investments.
Current Investments are valued at lower of Cost and Fair value. Non Current Investments are valued at cost,
except in the case of other than temporary decline in value, in which case necessary provision is made.
(xv) Foreign Currency Transactions
Transactions in foreign exchange are accounted for at exchange rate ruling at transaction date. Monetary assets
and liabilities denominated in foreign currency are translated at the rates of exchange at the balance sheet date
and the resultant gain or loss is recognized in the Statement of Profit and Loss. Exchange difference arising on
payment or translation of liabilities and receivables is recognized as income or expense in the year in which the
same arises.
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